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Carney Speaks; BOE Optimistic on GDP

GBP/USD showed
some gains today after Bank of England Governor Mark Carney released the inflation
report and updated the forecast for economic growth this year. Carney said that
the recovery has gained momentum in the economy.

-- Output is now growing at the
fastest rate since 2007,

-- Jobs are being created at the fastest pace, and

-- Target
inflation rate is back at 2% after four years.

All of these developments will
reduce import inflation pressures that was the main reason for the above target
inflation over the past five years.

The BOE in its forward guidance said that it
intends to maintain the asset purchase program until the first rise in bank
rate and mentioned the conditions that would have to be met before the bank
will think about raising Bank Rate.

The conditions are :Inflation
rate is within the target and there is no spare capacity gap particularly in labor
market over the next few years. And after these conditions are achieved,the bank will go with gradual and limited rate increase. So we can expect the
Bank rate to stay at low levels for some time to come.

On the 1 hour chart, the pair seems like
following upward channel trend. Also the 50 day moving average is above the 100
day moving average and acting as a support for the pair. We can see that it
provided support to the pair at three points: 1.6311, 1.6390, and 1.6425.